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How to Hire a Returns Outsourcing Provider

At first glance, the process of selecting a sales and use tax returns outsourcing provider may appear complicated. The nature and quality of service these outsourcers deliver varies, often in important ways. Some outsourcers are true “partners;” others are little more than a collection of temp workers.

A closer look suggests that the selection process can be more straightforward – and more effective – when companies apply many of the same principles to selecting an outsourcing partner that they’ve traditionally used when hiring a new employee.

It is helpful to evaluate prospective outsourcing providers as if they were an extension of your tax staff. While this approach requires rigor, the evaluation criteria it involves will sound familiar to anyone who has hired a new staff member.

This type of outsourcing vendor evaluation consists of a number of specific considerations, including the following four:

1.    Scope: The returns process consists of preparing and filing returns, funds management, and the handling of notices and credits. Some returns outsourcers only handle returns processing. Other outsourcers may claim to handle the entire returns process while actually outsourcing part of the process, or failing to perform these activities in a truly integrated fashion. Returns providers who do not deliver an authentic end-to-end solution are more prone to miscommunications and hand-off issues that can result in late payments, penalties, or other errors resulting from poor control and weak accountability.
2.    Experience: Experience applies to the firm itself (how many years the provider has amassed outsourcing sales and use tax returns) as well as to the tax experience of the individual returns preparers. Individual prepares must be able to draw on tax expertise to interpret the source data and correctly translate it to the return according to each jurisdiction’s requirements, which can vary dramatically.
3.    Communications:  Ideally, a provider will assign a dedicated point person (i.e., an account executive) to the client company. Tax executives may not hold daily conversations with this representative, but they should work with this partner to establish a regular reporting process – and they must be able to pick up the phone and reach this person any time a need arises.
4.    Reputation: Outsourcers’ reputations are based on how long they have been in business as well as the credibility and integrity they have established over the years with clients and tax jurisdictions alike.

This article offers a deeper look at these and other hiring considerations. Remember, each outsourcing provider, like each employee, is unique. By applying a rigorous “hiring” approach to the selection of an outsourcing provider, tax executives can ensure that they find a true partner that offers real value.

Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.


About this Contributor

Stephanie Malin Headshot
Stephanie Malin
Director, Managed Services

Stephanie Malin is Director of Managed Services at Vertex where she is responsible for leading the development of strategic initiatives for the outsourcing business. She has been with Vertex for more than 20 years working in marketing and product management roles for both transaction tax and income tax technology products. Stephanie currently serves on the Corporate Market Strategy Team and leads the Managed Services Task Force. Her prior experience has been with financial and technology companies. Stephanie has a bachelor’s degree in finance from Drexel University and an MBA from Temple University.

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